Research On The Market Effect And Influencing Factors Of China's Share Repurchase Announcement

In October 2018,the Standing Committee of the National People's Congress made special amendments to the provisions on share repurchase in the Company Law of the People's Republic of China.The amendments grants listed companies with more flexibility and autonomy in stock repurchase.The move has set off an upsurge in share buybacks in the domestic capital market.In 2019,the number of companies and the scale of share repurchase implemented by A-share listed companies in China reached a new record high.In 2019,the number of listed companies implementing Stock Repurchase was 1077,the number of shares actually repurchased was 17.225 billion,with the repurchase fund was 129.848 billion yuan.Stock repurchase has become one of the important means of capital operation of listed companies.The first part of this article introduces the research framework from the research background,research significance and technical route.Secondly,it summarizes and collate the research results of share repurchase theory and domestic and foreign scholars on stock repurchase,and finds that domestic and foreign scholars agree that the share repurchase announcement can bring positive effects to the market,no matter short-term effect or long-term effect.Based on the effectiveness of the securities market and the background of the development of the securities market,there are differences in the motivation of the repurchase stock and the factors influencing the stock repurchase market effect.The third part reviews the development history of China's share repurchase from two aspects: policies,regulations and practical cases.The state actively encourages the company to implement stock repurchase and expand the permitted scope of stock repurchase in the company law.At present,the characteristics of share repurchase business of A-share listed companies in China are characterized by large scale of repurchase,diversification of repurchase purpose,diversified sources of repurchase funds,centralized bidding transactions as main,tradable shares and restricted stock coexistence,and all sectors of the company actively participate in the fourth part.From 2013 to 2019,a total of 214 selected A-share listed companies with stock repurchase were selected as the research samples.The case study method was used to conduct an empirical analysis.The study found that the overall average excess return of the Sample Firms in the event window period on the stock repurchase announcement day was realized,and the stock repurchase announcement could produce a short-term significant positive effect on the market.At the same time,it was also found that the average excess return and cumulative excess return rate on the one day before the event dropped abnormally,and there was the problem of insider information leakage.According to the different events window,different repurchase purposes,different repurchase fund sources and different repurchase ratio groups,we found that the cumulative return rate of the event window after the announcement was the largest.The average return rate of stock repurchase on the day of announcement is the largest,and the effect of stock repurchase announcement on stock market is more stable on the day of announcement.However,the announcement of stock repurchase fund repurchase shares has a reverse effect on the market,which is totally contrary to the results of all his group.It is also found that there is no obvious correlation between the share repurchase ratio and the average excess return.The fifth part introduces 8 variables in three aspects,such as repurchase characteristics,corporate governance and financial situation,and uses multiple regression analysis to explain the market effect of stock repurchase announcements.It is found that there is a significant positive correlation between the number of stock repurchases and cumulative excess return.There is a significant inverse correlation between the idle cash index and the cumulative excess return.There is no significant correlation between the stock repurchase ratio,the first shareholder's shareholding ratio,the asset liability ratio,the diluted net assets yield,the P / E ratio and the total assets.Therefore,we believe that the short-term market effect of the share repurchase announcement is only related to the amount of stock repurchase and the amount of idle cash in the company.When the public investors study and judge the stock repurchase announcement,they mainly consider the information of the repurchase stock itself without taking into account the additional information such as corporate governance and operating conditions.Finally,the paper summarizes the research results in this paper,and encourages listed companies to conscientiously fulfill their obligations to disclose information and to formulate reasonable stock buyback plans.Remind public investors to enhance their awareness of stock repurchase and enhance their sense of rational investment.